Defence procurement targets UK yards

Success stories from the defence industry can’t mask the controversies that surround procurement in the sector

There can be little doubt about the economic vitality of Britain’s defence industry or the practical utility of the armed forces that it serves.

As DSEI rolls into the Excel Centre this week, it’s worth remembering that the defence industry directly employed 142,000 people in 2016, with companies reporting over £23bn in turnover and export orders worth £5.9bn.

According to ADS’ Defence Outlook 2017 over 60 per cent of the defence sector is confident of growth in the next 12 months, with export opportunities an important factor.

The trade organisation reports the security sector on an upward trajectory too, growing by 17 per cent and doubling turnover to £12.2bn in the past five years. In its UK Security Sector Outlook 2017, ADS add that exports account for much of this growth, which are up to £4.3bn this year.

The same report states that almost three quarters of UK companies in the security sector are expecting growth of at least 10 per cent in 2017, driven by domestic and export markets, especially Europe, North America and the Middle East.

HMS Queen Elizabeth at anchor at the mouth of the Forth in Kirkaldy Bay

As Hurricane Irma hits the west coast of Florida, Britain’s armed forces have been active in assisting relief efforts in UK overseas territories devastated by the seasonal extreme weather events.

Royal Fleet Auxiliary (RFA) Mounts Bay patrols Caribbean waters for six months of the year during the Hurricane season and so far in Anguilla its crew has helped deliver six tonnes of emergency aid, rebuilt and secured the emergency operations centre, restored power to the hospital, and cleared the airport’s runway to a serviceable condition.

Furthermore, nearly 300 UK military personnel equipped with aid supplies departed RAF Brize Norton on September 8, 2017 to provide immediate relief to people who have seen their homes destroyed.

A C17, Voyager and A400M aircraft carried over 200 Royal Marines, plus engineers and specialist personnel from all three services, medical supplies and aid including emergency shelter kits, rations and clean water to Barbados, which will act as the distribution hub for aid.

In its SDSR 2015 Defence Fact Sheet, the MoD points out that at the sharper end of the defence spectrum, the ‘increasing threat posed by terrorism, the resurgence of state-based threats, the impact of technology and the erosion of the rules-based international order are now particular challenges for the UK.’

As such, the government is committed to increasing the defence budget by 0.5 per cent above the rate of inflation, spending £178bn on equipment and equipment support over the next decade, which represents an increase of £12bn over previous spending plans.

Despite the efforts of the defence industry to maintain its skills base – the sector counted 4,300 apprentices in 2016 – and the success stories from its customers, the fact remains that military procurement is often accompanied by the grumblings cynics.

The UK’s QE Class aircraft carriers are a case in point, having been beset with issues surrounding delays, cost, and the very aircraft that will call the two carriers home.

The government report states: For reasons of national security, all Royal Navy warships (destroyers, frigates and aircraft carriers) will continue to have a UK-owned design, and, will be built and integrated in the UK. Warship build will be via competition between UK shipyards.

It adds: ‘All other naval ships [including Royal Fleet Auxiliary vessels] should be subject to open competition (provided that there are no compelling national security reasons to constrain a particular procurement to national providers),’ which invoked the ire of the GMB union, which described the strategy as a ‘missed opportunity’.

The union welcomed the decision to procure five Type 31e frigates, but said shipbuilding is at risk of being permanently damaged if Royal Fleet Auxiliary (RFA) contracts aren’t awarded to UK yards. GMB also criticised what it perceives as government’s lack of commitment to British steel in shipbuilding procurement processes.

Ross Murdoch, GMB national officer and CSEU national chair for shipbuilding said: “Sir John Parker’s shipbuilding review urged the government to better understand the socio-economic benefits of awarding non-warship building work, such as Royal Fleet Auxiliary ships, to UK shipyards.

“By failing to heed those warnings and taking the RFAs to international tender, the government has missed a golden opportunity to deliver sustainable prosperity to UK shipyards, the wider supply chain and the communities they support.

“Particularly at a time when there appears to be little or no progress in the Brexit talks, guaranteeing UK jobs on the RFA work would have given a much needed and immediate boost to the economy. Without the RFAs there would not be enough to sustain design teams and the number of potential apprenticeships – the net result of which will be a race to the bottom.”

DSEI exhibitions take place at London’s ExCeL centre between Sept 12-15.

Visit the UK’s dedicated jobsite for engineering professionals. Each month, we’ll bring you hundreds of the latest roles from across the industry.

When the government holds the purse strings they have the right and responsibility to also hold regular reviews and continuous oversight of UK shipbuilding that should force efficiencies and best practice into the production of these vessels for the betterment of all. It’s time government stopped exercising failed Thatcher policies are so detrimental to UK industry.

“force efficiency and best practice into the production of these vessels (its called market forces, democracy, capitalism and so on) for the betterment of all. ”
The only persons who believe this are those who believe ‘their’ contribution to society is so important that only they may provide it: and have cleverly insulated themselves from any commercial or market pressures. I know which groups of shams are on my list: I wonder if yours is the same as mine?

Every government pound (our taxes) spent in foreign shipyards is gone forever unless the foreign country spends that pound in Britain as part of the agreement.
Every government pound spent in British shipyards goes to the contracted company, then to the British worker, then to the British shop where he spend his money. The pond circulates in the British economy providing jobs to those in the shipbuilding industry and those with no connection to shipbuilding, And some of it is paid back to the government in taxes. So it is actually cheaper to build in Britain once taxation and unemployment benefit is put into the equation.
As long as Britain’s shipyards have any capacity of course government money should be spent there and not abroad. Who knows, perhaps the industry could actually expand.

Read the Australian Shipbuilding strategy and you will find quite a different approach. Their navy is approaching the same size as ours but they have come to different conclusions. No point in worrying about ‘competition’ – the numbers of destroyers and frigates being ordered is barely enough to keep one shipyard employed, let alone allow two to compete. So they have one shipyard to make destroyers, frigates and submarines and another to make patrol craft. The second priority is to ensure an end to boom and bust. Its no good allowing a shipyard to languish without orders, you simply find them in no fit state to build anything when the orders do materialise (like Barrow between the Vanguard class and the Astutes). I don’t think much if what I have seen of the UK’s ‘strategy’ so far, born more out of right wing economic ideology than common sense.

The figures I keep on seeing is that you can take 40-50% back through tax claw back from firms and people. It has to be remembered that a person on an average salary pays between 36-38% in tax. Building the Fleet Solid Support Ships abroad is a very bad idea and no value to the UK taxpayer. These contracts are tonnage large and are better suited to stimulating the new modern UK shipbuilding sector, which should be the condition of UK tax payer projects.

It adds: ‘All other naval ships [including Royal Fleet Auxiliary vessels] should be subject to open competition (provided that there are no compelling national security reasons to constrain a particular procurement to national providers),’ which invoked the ire of the GMB union, which described the strategy as a ‘missed opportunity’. It is one big eu rip off of Uk tax payers money. The national security reason is that you cannot do anything without logistics. These ships will be hugely expensive if built abroad. It has nothing to do with capitalism.